In re CHINA TIANJIN INTERNATIONAL ECONOMIC AND TECHNICAL COOPERATIVE CORPORATION

IN THE SUPREME COURT OF HONG KONG

COMPANIES (WINDING UP) NO. 438 OF 1994

____________

________________

D E C I S I O N

________________

1. By this notice of motion, the Petitioner seeks the stay of all further proceedings in this winding up. The company in question is, of course, a PRC company and the details of the background of this matter can be found in my judgment dated the 14th December 1994.

2. I have been asked to make this order on the basis that the only known creditor of the company, namely the Petitioner, has now compromised his claim with the company and there are no further creditors known. Certainly there are no further creditors known in Hong Kong.

3. The basis upon which stay of winding up proceedings is made has been set out by Mr. Justice Buckley in the case of Telescripter Syndicate Limited which is 1903 2 Ch. D. 174. At p. 180, he said this :

"Where application is made in bankruptcy to rescind a receiving order or to anul an adjudication, the court refuses to act upon the mere assent of the creditors in the matter and considers not only whether what is proposed is for the benefit of the creditors but also whether it is conducive or detrimental to commercial morality and to the interests of the public at large. The mere consent of the creditors is but an element. In the case of Re Hester some trenchant observations of Fry L.J. will be found on the idle notion that the court is bound by the consents of the creditors. The court has to exercise a discretion. It is bound to regard not merely the interests of the creditors, it has a duty with regard to the commercial morality of the country, see in Re Hester, Re Flatow and in Re Taylor. I am here asked to exercise an analogous jurisdiction and I may say that it is in my opinion desirable that so far as possible the court should not assume a different attitude or act upon a different principle in the winding up of a company and in the bankruptcy of an individual. I have here to say whether it is proved to my satisfaction that all proceedings in relation to the winding up ought to be stayed."

4. I turn here to the facts of this case. During the submission the draft settlement agreement between the Petitioner and the Respondent Company was shown to me. That is a confidential agreement and its terms are not to be disclosed. I will, therefore, not refer to the details of it but I have to say that I find it very difficult to say that I am satisfied as to commercial morality. The decision in this case should not therefore be taken as any precedent in the future. In my view it may well be necessary in any future case for evidence to be filed to show that the agreement between the parties does reflect a proper commercially moral agreement and not an agreement to which one of the parties has been forced.

5. In the very special circumstances of this case I propose to exercise my discretion to allow the stay. I do so for these reasons. In the first place the underlying judgment in the United Kingdom has now been set aside and so following upon that the registration of that judgment in Hong Kong has gone. There is now, it seems, to me a fundamental difficulty as regards the basis of the petition. Furthermore, the situation is now quite clear that there are unlikely to be any assets of substance available to the liquidators in Hong Kong, the continuation of these proceedings are unlikely to bring any further benefit to anybody. In these circumstances, as I say with some hesitation, I grant the stay of these proceedings.